Outsourcing drives IT services market growth

Thanks to outsourcing, the Western European IT services market is keeping steady in the face of the uncertain economic conditions, according to IDC.

The report said that the Western IT services market performed better than expected in 2007. It reached a value of $192.3 billion (97 billion) and grew at 6.4 per cent in constant currency.

Due to the current economic conditions IDC was more conservative with its predictions for 2008, with a growth forecast of 4.8 per cent compound annual growth rate, with the market reaching $243 billion (122 billion) by 2012.

"As the European economy cools down, the outsourcing segment continues to be the growth engine of the IT services market," said Laura Converso, research manager at IDC European Services Research.

"The overall outsourcing market will exceed the size of project-based services by 2008 and will account for 42 per cent of the total IT services market by 2012."

She added: "At a worldwide level, IDC estimates that Western Europe will eclipse the US to become the largest geographic market for ... outsourcing by 2009"

The study also suggested that demand for IT services would slow down at a Western European level, with a 1.8 per cent drop in spending growth compared to 2007, leaving total growth in 2008 at 4.6 per cent.

IDC believed that the credit crunch would not have as much effect as it did in the US, but the uncertainty would still lead to fewer new contract signings.

It also believed that, alongside France and Italy, the UK's spending growth would grow lower than the Western European average, whereas Germany and Spain's would exceed it.